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Documents & Resources - Housing Development Seminar |
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REAL
ESTATE BOARD APPROVAL AND USE OF ESCROW FUND
REAL ESTATE BOARD
APPROVAL AND USE OF ESCROW FUND Real Estate Board’s
Approval and
Use of Escrow Funds by Developers
REAL ESTATE BOARD’S
APPROVAL PROCESS
Section 26 of the Real Estate (Dealers and Developers) Act
states: “A person shall not enter into a prepayment contract as
a vendor in connection with any land which is, or is intended to
be, the subject of a development scheme”.
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To register as a Developer
the Board requires that:
The land, ‘subject of the development scheme, is free from
any mortgage or charge except where such a ‘mortgage or
charge on the said land has been duly created in favour of
an authorized financial institution to secure repayment of
amounts advanced by that financial institution in connection
with the construction of any buildings or works on the said
land’.
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All approvals for a
subdivision of land and or a housing development has been
obtained from the Local Planning Authority prior to the
submission of an application to the Real Estate Board.
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The owner of the land
must be the person in whose name the application is made.
The Board will also accept an application by the owner and
other partners if a joint venture agreement is in place.
An application form to register as a developer, must be
completed in the name of the registered owner of the land
and accompanied by the following:
- an application fee of (a) $ 20,000.00 for schemes of 6 to
20 lots/units
(b) $30,000.00 for schemes of 21 to 40 lots/units
(c) $50,000.00 for schemes of 41 lots/units and over
- a development fee of $1,500.00 per lot/unit
- the title, to the land subject to the scheme in the name
of the Vendor
- a copy of joint venture agreement, where applicable
- an explanation of financing for the development scheme
- a copy of the conditions of approval for the project,
granted by the K.S.A.C. or the Parish Council
- a copy of the approved plan from the Local Planning
Authority
- receipts from the Trustee in Bankruptcy and the Ministry
of National Security and Justice for each director and
company secretary to have statutory checks done.
BOARD SUPERVISION OF DEVELOPMENT
SCHEMES AND TRUST ACCOUNTS
The Real Estate (Dealers and Developers) Regulations require
that all purchasers’ deposits on units in a development
scheme must be placed in a Trust Account in an authorized
financial institution.
Withdrawals can be made only in the following conditions:
- Monies withdrawn are applied by the vendor in the payment
of Stamp Duty and Transfer Tax payable in respect of this
contract.
- Monies are placed in another Trust Account in an
authorized financial institution.
- Monies, not exceeding ninety percent of the amount
certified by a qualified quantity surveyor, can also be
withdrawn as payment for materials supplied or works already
done in respect to the particular scheme, subject to
lodgment of a charge with the Registrar of Titles on the
land subject of the scheme.
- Upon completion or rescission of the contract.
Advertisements for sale of land in a development scheme must
comply with Regulation 18 of the Real Estate (Dealers and
Developers) Regulations.
INFORMATION IN ADVERTISEMENTS
When developers advertise units or lots for sale, the Real
Estate, (Dealers & Development) Act stipulates that the
advertisements MUST state clearly:
- from whom the approvals for the scheme were obtained;
- where and when the plans, drawing and specifications may
be inspected;
- the location of the land and its physical feature;
- the dimension and gross covered floor area of each type of
building in the scheme;
- the composition of the walls, floor and roof of each
building;
- the sale price of each type of building unit;
- whether the contract includes an escalation clause.
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